QBiz: SEBI to Crack Down on Wilful Defaulters, Pay Panel Bill

1. SEBI Set to Get Tougher With Wilful Defaulters: Livemint

The Securities and Exchange Board of India (SEBI) will make it difficult for so-called wilful defaulters from raising fresh equity or debt from the public, according to Livemint.

The move will mark yet another effort by the Indian government, the Reserve Bank of India (RBI) and now SEBI to crack down on the problem of bad loans.

SEBI will, however, allow such entities to raise funds through rights issues or share sales to institutional investors, said one of the two persons, asking not to be identified.

The entity will need to disclose itself as a wilful defaulter in the offer document if it chooses to go in for a rights issue (sale of shares to existing shareholders), or a qualified institutional placement, added this person

2. Pay Panel Bill: 25 Percent Not Budgeted For: FE

The Centre has budgeted to meet nearly three-fourths of the estimated cost of the Seventh Pay Commission award in 2016-17 with a provision of some Rs 53,500 crore, as it deferred the payment of extra allowances of about Rs 22,000 crore, reports Prasanta Sahu in New Delhi.

The budgetary outlay for salaries and pensions rose by Rs 59,000 crore or 21 percent to Rs 3.36 lakh crore in FY17, while the pay panel had pegged the annual hike in the outlay for pay, pension and allowances from the business-as-usual scenario at Rs 73,650 crore.

While the outgo on the one rank, one pension (OROP) scheme is subsumed in the above budget outlay for FY17, the commission had estimated the overall increase in pay, allowance and pensions (PAP) over the usual scenario at 23.6 percent. Despite no provision for allowances, the extra PAP outlay made by finance minister Arun Jaitley for FY17 is tending closer to the additional expenditure estimated by the commission.

A government panel on genetically modified Bt cotton has recommended a steep reduction in royalty fees payable to technology companies, and lower seed prices.

If accepted, the recommendations will benefit nearly 8 million cotton farmers in India, but may raise concerns about how India views its intellectual property rights regime. They will deal a blow to technology providers such as Mahyco Monsanto Biotech (India) (MMBL).

The nine-member cotton seed price control committee, formed by the centre on 27 January, has recommended a maximum sale price of Rs 800 for a 450 g packet of Bollgard II Bt cotton seeds.

4. RIL May Miss Fuel Outlet Deadline: BS

Reliance Industries (RIL) is set to miss its deadline for re-opening all 1,400 retail fuel outlets by March-end. Till December, the company had 750 operational retail outlets, up from 320 such outlets in April last year.

We are opening all our outlets one by one. In the next few months, we would be opening the other closed outlets. A lot of infrastructure details have to be looked into before re-opening of these outlets.

RIL says it is also trying to address the perception that fuel at its outlets is costlier than the state-run oil marketing companies (OMCs). The company had shut down its fuel retail outlets in 2008 when global oil prices surged to $150 a barrel. While the state-run OMCs were providing subsidies to customers, private fuel retailers couldn’t survive in the market.

Coming down heavily on the finance ministry for alleged misuse of the discretionary powers to arrest defaulters of service tax, the Delhi High Court on Thursday said that the companies can’t be forced to cough up tax claims at “gunpoint”.

A bench of justices S Muralidhar and Vibhu Bakhru while taking strong objection to ‘premature arrest’ of a senior official of online travel company MakeMyTrip without even issuing a show cause notice, asked if the government was “reducing” a fiscal statute (Finance Act) to give police powers to the tax officers.

Stating that there is no indication of MakeMyTrip being a chronic defaulter, the court asked the firm to file an affidavit and name the tax officials who arrested its vice-president (finance) MK Pallai for service tax evasion in January. Pallai is now out on bail.

Varun Beverages, the second largest PepsiCo bottler in the world, has started preparations for an initial public offering (IPO), seeking to raise funds to expand at home and overseas, three people aware of the development said.

The company, the flagship firm of Delhi-based billionaire Ravi Jaipuria, may raise at least Rs 1,000 crore through the IPO, expected to hit the market in early 2017, said one of the three persons, all of whom spoke on condition of anonymity.

Varun Beverages is a distributor of PepsiCo products in north and east India and the largest bottler for the US-based beverage maker in South Asia, with operations in India, Nepal and Sri Lanka. Globally, it’s the second largest bottler of PepsiCo beverages, behind only Tingyi Holdings of China.

7. Dividends Deluge to Keep Taxman at Bay: BS

In the three days since the Union Budget, at least 70 companies have called board meetings to declare interim dividends — in a bid to get the money to the shareholders before the tax on promoters’ dividends kicks in on 1 April.

The Budget, presented on Monday, had proposed a 10 percent tax on the dividends for those promoters with annual dividend income of Rs 10 lakh or more.

Now, about 70 firms — including Bajaj Auto, Sun TV Network, Piramal Enterprises, and Divi’s Laboratories — have called for board meetings to declare interim dividends, payable before 1 April. Several of these firms have also fixed a record date.

Tata Asset Management is in talks to buy out the assets of JPMorgan’s domestic mutual fund business, said two people familiar with the discussions. If the deal goes through, JPMorgan will be the seventh global financial services firm to exit the Indian mutual fund industry in the last three years.

Tata is said to be negotiating to pay less than 1 percent of JPMorgan Mutual Fund’s assets under management (AUM) of close to Rs 6,800 crore as on January 30. This could not be confirmed independently. Tata Asset Management has assets worth Rs 29,000 crore in the period.

At 1 percent, JPMorgan Mutual Fund will be valued at closed to Rs 68 crore. The valuation under negotiations is lower than that of previous domestic transactions in the industry which have happened between 2 percent and 4 percent of the target’s AUM.

9. China Bashing, Slowdown Leave US CEOs Unfazed: ET

China’s slowdown is roiling markets worldwide and it’s open season for China-bashing by Donald Trump and others on the presidential campaign trail. US companies from Apple and Starbucks to aerospace giant United Technologies and wireless chipmaker Qualcomm are taking the long view: This is a time to be investing big in the world’s second-largest economy.

Coming amid the recent economic and currency turmoil, US CEOs’ steadfast stance on China’s long-term attractiveness is worth noting. Anti-China chatter on the campaign trail, such as Trump’s assertion that “they’ve taken everything,” is hardly deterring businesses’ plans to expand there. After all, it’s at least a $400-billion market for American companies, the US-China Business Council reckons.